The following Tax practice note provides comprehensive and up to date legal information covering:
This Practice Note examines:
the stamp taxes that arise on issue or subsequent transfer of:
bearer bonds, and
exemptions from the imposition of such stamp taxes
the stamp taxes in relation to bonds issued or transferred into clearance services or depositary receipts systems, and
the impact on bond issue documentation
Alongside withholding tax (see Practice Note: Bond issues—withholding tax), stamp taxes on issue or subsequent transfer of a bond are a major consideration for issuers and bondholders.
While issuers generally carry the cost of stamp taxes on issue (and any such taxes would therefore represent an additional transaction cost), the burden of any charge on a subsequent transfer of a bond usually falls to the bond transferee. It is usual to clarify the stamp tax position in the tax section of an offering document because any charge arising may affect marketability. Both issuer and bondholders would therefore prefer there to be no stamp taxes arising on a bond.
Most plain vanilla bonds (meaning a bond issued by a UK incorporated company with a commercial rate of interest and no unusual features) can be issued and transferred without a charge to any stamp tax. The same is true for unlisted bonds (even if they have unusual features, such as special interest or capital uplift rights) provided they
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